ECONOMIC
MANAGEMENT:
POLICIES AND GOALS
Economic Growth
Economic development
Trade Union
Economic
Growth
Economic Growth refers to the increase in a country's output of goods and services over
time, usually measured by the rise in Gross Domestic Product (GDP).
Economic growth is looked at as the increase in real per capita gross domestic
product(GDP). Real per capita GDP is the real GDP per head of the population. This is found
by dividing GDP by total population.
Economic growth reflects a quantitative increase in economic activity.
If there is economic growth, there is an increase in real per capita GDP. Output in the
economy is not only increasing, but doing so at a faster rate than any increase in population.
Example: If Jamaica's GDP increases by 5% in a year due to higher tourism revenue, that is
economic growth.
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Drivers of Economic
Growth
❑ Land (Natural Resources): Natural Resources: Countries rich in resources (e.g., bauxite in Jamaica, Countries with
more factor land e.g. Canada is said to have more growth but not in every case, as Singapore has little to no factor
land but has economic growth; Countries can generate significant revenue from exports.
❑ Labor (Human Capital):
Human Capital Development: Education and skill training improve worker productivity and innovation creating a more
skilled workforce.
❑ Capital (Physical and Financial):
Investment in Physical Capital: Increased spending on infrastructure (e.g., roads, ports) can boost production and
economic activity. Technological Advancement and Innovations increase efficiency and reduce costs, leading to
higher output.
❑ Entrepreneurship/Government's Role: Individuals who start businesses and innovate ideas often leading to
product development contribute to both improvement and economic growth. Government Policy: Fiscal and monetary
policies that encourage business investment and consumer spending can drive growth. (Governments set the
economic stage, and sometimes can be considered a kind of entrepreneur in large scale projects
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Economic Development
Economic Development is concept that includes improvements in living standards, income distribution,
education, health care, and environmental sustainability. It reflects qualitative changes and better social
outcomes.
Economic development is the sustainable increase in the quality of life of residents in developing counties
due to the changing structure of the economy. Human well-being must improve if we are to say that
development has taken place. Economic development is multi-dimensional; that is, there are many aspects
to economic development. There must be continuous economic growth(increased real per capita income),
better education and health, as well as conservation of the environment.
Example: In Jamaica, initiatives like the PATH (Programme of Advancement Through Health and Education)
programme that provides financial assistance to low-income families represent economic development.
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Economic Development
The country must move from being a developing country to being a developed country. There must be job
creation.
Economic development, in its simplest form, is the creation of economic wealth for all citizens in the different
levels of society so that all people have access to potentially increased quality of life.
Some aspects of economic development are:
an increase in real per capita GDP;·
diversification of the economy from primary production (agriculture and natural resource extraction) to
secondary and tertiary production, and economic activity;·
increased access to health services;·
increased access to education;·
infrastructure development enabling the creation of a modern transport and communication network;·
a low level of negative externalities;·
freedom and social justice.
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Measures of Economic
❑
Development
Human Development Index (HDI): HDI measures a country's average achievements in three basic aspects of human
development: life expectancy, educational attainment (literacy rate) and adjusted real income. It is the means of measuring
quality of life welfare and the level of development based on the HDI we can determine whether a country is developed
developing or underdeveloped
❖ Quality of Life Indicators: Measures such as literacy rates, infant mortality, and life expectancy highlight social well-being.
❑ Income Distribution: Measures how equitably income is shared among a country's population.
❑ Access to Basic Services: Availability of healthcare, education, and sanitation reflects development progress.
❑ Human Property Index (HPI): HPI measures deprivation using the percentage of people expected to die before the ae 40, the
percentage of illiterate adults, the percentage of people without access to health services and safe water, and the percentage of
underweight children under 5 years old.
❖ A Reduction in the number of people living below the poverty line is a sign of development.
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Economic Growth Vs Economic
Development
❑ Economic Growth focuses on an increase in GDP and output, while Economic Development
emphasizes improvements in quality of life and social welfare.
❑ Economic Growth is quantitative and measurable, whereas Economic Development is qualitative
and broader in scope.
❑ A country can experience Economic Growth without Economic Development if income
inequality and social challenges persist.
